With Good Looks Come Big Profits

When it started out in the late 1990s, Built NY faced one tough competitor: the brown paper bag.

Nowadays, the New York-based company, which makes splashy neoprene wine and lunch tote bags, is selling its wares across the U.S. and in 20 nations around the globe.

That success stems from a simple, straightforward mission to make "smarter- and better-looking stuff" by focusing on and investing heavily in product design.

"Design informs everything we do," says John Roscoe Swartz, the company's co-founder. "It's the thing that sets us apart from any other company in our category."

And where brown paper bags are normally balled up and thrown away, Built NY's tote bags are far more likely to steadily increase in value with time. Swartz said he hopes to one day join the ranks of consumer artifacts, collectors' items, and kitsch found in places like the Cooper-Hewitt National Design Museum or the Museum of Modern Art.

"Because expectations change over time, it's impossible to say if our products will still be in use 50 years from now," he says. "But it would be great to be included in the hall of fame of great designs from the past."

What's certain is that investing in design is bringing both immediate and lasting returns for small businesses and major corporations alike -- from Built NY to Apple.

According to Frog Design, a design consultancy based in Palo Alto, Calif., small businesses stand to gain a potentially lucrative payback from taking design seriously, with a return on their design investment of up to 250 percent -- based on its experience with businesses as big as Disney, and as small as Helicor, a medical device maker with just a few employees.

Among other benefits, a good design strategy -- one that includes not only the product, but is also integrated into the entire production process, from packaging to branding and marketing -- can bring higher perceived value for a product, while building stronger brand loyalty, according to the firm.

At a practical level, a thorough design strategy can help reduce time to market, development costs, and redesign costs for new products, by assessing and standardizing parts and processes, according to Mick Malisic, director of marketing for Frog Design.

Yet, beyond that, Malisic says, well-designed products can connect to consumers on an emotional level and, as such, are perceived as more valuable in the marketplace and often command a premium.

"The average U.S. consumer is getting more and more design savvy," says Grace Bonney, the creator of design*sponge, a New York-based website focusing on design news and commentary. "They're putting more time and money into choosing the everyday products that go in their homes. And small businesses need to keep up with that."

For Bonney, one of the best examples is Method, a San Francisco-based non-toxic cleaning-products firm launched a few years ago by two 20-something friends. To distinguish itself from big competitors, Method hired top designer Karim Rashid to create its bottles, which it then sold as a mass-market consumer product at big box stores across the country.

These days, the company brings in well over $10 million in annual revenue.

"While not every small business can afford a Karim Rashid, there are so many independent design firms out there now," Bonney says.

"Like it or not, the way your product looks matters just as much as what is does," she adds. "Designers want to make things that stick out from the ordinary, and, as a business owner, you should want to do that."